When we talk about scaling, we mean changing size. When we talk about scaling organisations, we are mostly talking about the growth, i.e. the enlargement, of organisations (although this is by no means self-evident). If an organisation gets more orders than it can handle, then it has a good reason to scale (it doesn’t have to – as long as there is no contracting constraint). Scaling means responding to growth and change – generally adaptation. If an organisation grows or needs to grow to meet a larger order book, then it needs to grow. If it has to adapt to a changing market situation, then it has to change. This means either that more people work in the organisation or that the existing ones are used differently (or both). And the work of these people needs to be structured.
If the organisation is thought of functionally and hierarchically, each individual function is designed in such a way that the subtask it has to solve can be solved most efficiently. The design itself is oriented towards the solution of the subtask. Traditional organisational design follows a pyramidal structure: the further up the hierarchy you go, the fewer people you find. The more global and far-reaching the tasks and decisions are, the fewer heads are assigned to them.
In order to carry the decisions of the few heads into the organisation, stringent reporting lines are required – each function has a contact person, each sub-function is represented by one person and the information is increasingly fanned out from top to bottom, or summarised, aggregated and consolidated from bottom to top. Enrichment takes place from top to bottom, and omission from bottom to top. The few heads who make the global decisions have the least knowledge about the implementation capabilities and implementation paths in their organisation.
A high-precision clockwork
This form of organisation is reminiscent of a high-precision mechanical clockwork. Every spring, every screw and every cogwheel is perfectly balanced and follows its purpose and function. In an ideal organisation, the cogwheels mesh perfectly and drive them in a specific, predictable rhythm. Tasks are clearly distributed and functions are clearly coordinated. But what happens when a part breaks down, say because a specialist leaves the company? Then the function must be filled by an existing non-expert until a new expert arrives. And this new expert also needs a training phase. So the function is only just adequately fulfilled, and the actual work of the person filling it suffers as well. We have inserted a plastic gear wheel from the 3-printer into our high-precision clockwork. This keeps the mechanism running, but it won’t last long and it reduces the precision.
Organisation by design
The design itself is only oriented towards the solution of the sub-task and not towards the requirements of the other functions, so it is completely detached from the other functional areas. This has the great advantage that each individual element can be very specialised. The entire structure in an element designed in this way is geared precisely to the completion of a specific task in a specific context. The efficiency in this element should be very high.
The disadvantage is that each individual element may represent completely separate structures and its own organisational structure. This in turn means that interfaces have to be developed between the elements because, by design, they do not necessarily fit together at all. So it is not only the design of the elements that is needed, but also the design of the interfaces between the elements.
The geometry of nature is fractal and full of recursive structures. The structure of a tree is also found in the structure of the leaf. Recursion leads to self-similar patterns. The large resembles the small, and the small resembles the large. Regardless of whether you look at the structure from a distance or take a closer look at the details, the structure is self-similar and always follows the same set of rules. If you look at a whole tree, you will see the same structure as with a branch, a twig and a leaf.
Why do cabbages, flowers and trees form recursive, fractal structures? The answer is as banal as it is simple – because they grow organically. A tree does not consist of the departments trunk, leaf and branch and the cross-sectional service water supply. Such a tree could not grow, it would have to be designed and constructed. It would be completely specialised for one task. Once constructed, it could not adapt or change. It would have the same problem as many classic Steampunk Organisations. These are designed according to the rules of 19th century organisational theory and have not grown organically. Each functional area has its own structure, its own language and even its own culture.
“A recursive structure is, in principle, an infinite process…”. – it repeats itself continuously and thus forms all the necessary structures. A recursive structure is scalable and thus capable of creating all organic structures. You don’t have to worry about what department A looks like to perform special function A and how it differs from department B. The structure is always the same. The structure is always the same. The inner logic is always the same – the difference is in the use. The difference is in the use of the structures. “… which contains itself as a part.”
The recursive structure follows a simple set of rules that form the whole organisation in the process. And this set of rules is found in every entity of the network, in every node, in every neuron of the organisation, i.e. in every human being.
A fractal organisation always functions according to the same triad. There is a strategy layer – why do we do what we do -, there is a portfolio layer – what do we need to do to achieve our goals – and an operations layer – how do we achieve our goals – and these are to be networked together according to a body of rules. They have firmly defined inputs and outputs. Scale in a fractal organisation is built easily because you can expand the network both horizontally and vertically simply by connecting this triad. Specialisation is then determined by the types of work in the network section. Legal draws up contracts, Development bends sheet metal, and HR provides new network nodes. The differences are defined at the operational layer, where the actual work is completed.
The course of work in a fractal organisation is always the identical. This means that any scenario can be easily modelled and added to the organisation without disruption. This is the opposite of a designed organisation, which is highly specific but not very flexible.
A Flight Levels System Architecture helps us to fathom the fractal geometry of the organisation. While Flight Levels 3,2 and 1 constitute the neurons of the neural organisation. Agile Interactions form the carrier events for information flow and Measure Success provides the neuroplasticity of the network organisation. Like a brain, the neural organisation is improved organically by use. Is there a better reason to think fractally about organisations and to model them with flight levels?